As the city looks seriously at our revenue challenge, more and more people have been asking me about the prospect of pursuing a “sin tax” in Kent. After all, Cleveland built Jacob’s Field from a sin tax passed in 1990, and there’s a new one on the ballot this year to fund the arts — so why don’t we look at it one to raise the revenues we need to keep Kent the vibrant community we want it to be. Sin taxes raise revenue by imposing excise taxes on liquor and tobacco which happen to be a couple of the most popular commodities in our college town and also contribute to a lot of our city service calls, e.g., police and fire. The idea behind sin taxes is to couple bad behavior with public good. Can it work here?
What is a sin tax?
Sin tax is a phrase for a tax specifically levied on certain generally socially-proscribed goods – usually alcohol and tobacco. Sin taxes are often enacted for special projects – American cities and counties have used them to pay for stadiums – when increasing income or property taxes would be politically inviable. The proper name for such taxes is sumptuary tax
How does a sin tax work?
Sin taxes are a means of introducing a price signal to customers in the form of a price charged for a given commodity, that also indicates a message intended to produce a particular result. In other words, it’s a value laden tax that says if you consume this product you should pay more because it has some consequences that are viewed as bad for the public good. It’s a free country, so you can still choose to consume these products but you owe it to the rest of us to pay more.
How does a sin tax get passed?
It turns out that in Ohio only counties can adopt sin taxes. So the city of Kent cannot pass one — we’d have to convince the Portage County Commissioners to adopt a sin tax county wide. I think a lot of people see the relevance of sin taxes in Kent — we have a large student body population that like most college towns drink alcohol which contributes to late night service calls for city police and fire — but that same statement cannot be generalized to the rest of the cities and townships in Portage County, so I’m not sure support for the concept extends much beyond Kent’s borders.
In other states that I’ve worked in we’ve been able to go to the state legislature to seek special authorities in cases like this to allow a city, under a special circumstance for a special reason, to be granted the authority that is typically only available to counties. That may be one way to pursue a sin tax for Kent.
Things to keep in mind
The logic behind a sin tax seems self explanatory — a city that has a large student body probably has higher than normal service demands so the students need to ante-up. But it’s important to remember that while the students don’t currently pay a direct special tax of fee, their tuition supports the faculty and administration of Kent State that contributes more in income taxes overall than the students create in additional services on the city. In other words, while the arrival of 24,000 students in our city each year increases our cost for city services, the revenues generated from Kent State contribute more than their fair share to pay for those extra services.
That’s not to say the idea doesn’t have merit but we need to keep the discussion on the facts.
I’m not sure a .25 cent increase in the price of drinks would make much of a difference in alcohol consumption in Kent but again we have to be sensitive to the segment of our business community that makes it’s living off of those drink sales. Kent’s night time businesses are thriving and in an era when every job counts we don’t want to lose those night time jobs either.
You can read more about issue 18 on the Cuyahoga County Ballot that proposes to increase the price of a pack of cigarettes by .30 cents to fund the arts in the county.
Cleveland Plain Dealer
September 20, 2006
Columnist Dick Feagler writes “We need to live up to our heritage. We have cultural marvels here that few towns our size can boast. We don’t want to lose them.”
Read the full article here:
Reporter Mark Urycki covers our Kick-off meeting
September 19, 2006
Listen here: http://www.wcpn.org/mp3/2006/0919issue18.mp3
‘Yes’ on Issue 18
THE PLAIN DEALER
September 14, 2006
‘Yes’ on Issue 18; Greater Cleveland’s treasured arts resources are in peril; a 10-year tax on cigarettes will stave off irreparable loss.
The Cleveland metropolitan area is a treasure trove of art and artists: The internationally renowned Cleveland Orchestra and Cleveland Museum of Art, a bevy of bustling theaters, opera, dance and more. Yet many of these organizations are dancing for their fiscal lives. Unlike other major metropolitan areas, Cuyahoga County gives the arts only a little support. Now there is a way for voters to right that wrong. County residents should support Issue 18 in the Nov. 7 election. If approved, the 10-year tax would add 30 cents to each pack of cigarettes, raising about $20 million annually for a worthy cause.
Many smokers and their allies in the tobacco industry are sure to object. And we agree: This particular tax is not ideal, especially since it forces a shrinking minority to pick up the tab for supporting the arts. Smoking exacts a horrible financial toll on the county’s budget.
The commissioners point out that smoking related diseases among the poor drive up costs at county-supported MetroHealth Medical Center. But the value of the arts community to all of Northeast Ohio is simply immense. The arts inject about $1 billion annually into the area economy and support hundreds of good-paying jobs. Ticket sales and grants pay most of the freight, but arts groups desperately need bolstering from other quarters. Property owners, already strangled by taxes, must be concerned with providing basic county services. If this tax passes – and it should – the arts council that the commissioners established must be a good steward of the funds. Yes, some organizations are desperate for dollars. But the county must resist the temptation to resuscitate those that have flat-lined. A far better idea would be to plow into a trust fund a portion of the anticipated $200 million to be collected during the next 10 years. That way, the county will have money on hand in lean times, or if an extraordinary expenditure is required. A decade is also long enough to lay the groundwork for a future arts levy, involving the surrounding counties, that would create wealth and spread the pain far better than does this single-county cigarette tax. But that’s down the road. For now, it’s important to shore up arts organizations in Cuyahoga County. Issue 18 is one way to do that.